What Medicare and Medicaid Do and Do Not Pay for in the Nursing Home Setting

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1 What Medicare and Medicaid Do and Do Not Pay for in the Nursing Home Setting Medicare Skilled Rehabilitation/Nursing Benefits A. Medicare is health insurance for the aged (over age 65) and disabled (individuals determined to be disabled by the Social Security Administration). Medicare will only pay for skilled rehabilitation/nursing services provided in a skilled nursing facility ( SNF ) for UP TO 100 DAYS and only if: 1. Patient was hospitalized as an INPATIENT for at least 3 consecutive days and nights (not counting the day of admission) and either a. Is transferred directly to a SNF, or; b. Went home and then to a SNF within 30 days of discharge from the hospital; 2. The patient s physician ordered SNF care (rehabilitation or nursing) for the condition for which the patient was hospitalized; 3. Medicare determines the care is medically necessary and reasonable; and, 4. The patient meets the Medicare SNF criteria throughout the entire SNF stay, which occurs through re-evaluation every 10 days to two weeks. (For example, the patient needs skilled nursing care services care management supervised by an RN, complex medication/dressing/care management; skilled PT or speech therapy). B. Payment by Medicare is only for what Medicare deems reasonable and necessary. If all SNF criteria are met, Medicare should pay full SNF costs for the first 20 days and then from days makes partial payment the co-payment required of the resident is $161.00/day for 2016). If the resident has a Medicare Supplemental policy, such policies usually pay for this co-payment. C. IF a nursing facility informs a patient that Medicare will no longer pay for skilled rehabilitation or skilled nursing services and it is before the end of 100 day period, the patient can appeal the nursing home decision to a Patient Review Organization (PRO) by requesting a demand bill. If the PRO agrees with the nursing home, the patient will have to pay for the time spent in the facility during the appeal. Rev. 4/26/2016 Page 1 of 5

2 MO Health Net (Medicaid Nursing Home) Coverage A. Medicaid Programs are state specific rules vary for each state. B. SNF Medicaid coverage = Vendor Medicaid. Pays for ALL SNF costs custodial care, physician care, meals, room & board, therapy, etc. Does not pay for private room, beauty shop, cable or TV, telephone and other amenities. Does not pay for bed hold beyond three days of hospitalization. C. For dual eligible (individuals who have Medicare and Medicaid), Medicare will pay for hospital and external nursing home medical services; Medicaid covers medical services and supplies provided in the nursing home. Dual eligible prescription drugs will be covered under a Medicare Part D program. D. Resident must occupy a Medicaid certified bed for at least 30 continuous days to be eligible. NOT ALL NURSING HOMES HAVE MEDICAID BEDS! E. Eligibility Criteria: These rules apply to individuals seeking to preliminarily plan for future Medicaid application as well as for individuals seeking to apply for Medicaid benefits immediately. 1. Individual: Non-Countable/Exempt Assets (Assets that a Medicaid applicant is allowed to keep) a. $ b. Residence (Note: Changes due to Deficit Reduction Act of 2005 (DRA) and changes in Missouri law in 2005, Missouri Medicaid is filing liens against the home of applicants which will be exercised (requiring that the home be sold) upon the death of the Medicaid recipient if no Community Spouse, minor child or adult disabled child resides in home to re-pay Medicaid for benefits paid. Applicant will not be eligible for Medicaid unless net value of home is below this $552,000 (or a higher value if states opt to raise value). c. One vehicle d. Wedding ring e. Personal and household effects (other than collectables of high value) f. Life insurance policy with cash surrender value ( CSV ) of $1,500 OR irrevocable pre-paid burial plan of any value Rev. 4/26/16 Page 2 of 5

3 g. Burial plot for self and each immediate member of family. 2. Married Couple: Stay-at-home spouse is Community Spouse ( CS ); Spouse in the nursing home is Institutionalized Spouse ( IS ) a. $999 (IS may retain); $2, (if both individuals in a SNF), but then the rules for single individuals apply to their assets. b. Residence (Note: Changes due to Deficit Reduction Act of 2005 (DRA) and changes in Missouri law in 2005, Missouri Medicaid is filing liens against the home of applicants which will be exercised (requiring that the home be sold) upon the death of the Medicaid recipient if no Community Spouse, minor child or adult disabled child resides in home to re-pay Medicaid for benefits paid. Applicant will not be eligible for Medicaid unless net value of home is below this $552,000 (or a higher value if sates opt to raise value). c. One vehicle d. Wedding Ring e. Personal and household effects (other than collectable of high value) f. Life insurance policy with cash surrender value (CSV) of $1,500 or irrevocable pre-paid burial plan g. Burial plot for self and each immediate member of family. h. Asset Retention rules - In 2016, the CS is permitted to retain one-half of the marital assets (regardless of how titled) up to $119,220. The CS is permitted to retain at minimum $23,844. ADDITIONALLY, current Medicaid law permits the CS to purchase a Medicaid Qualified Annuity ( MQA ) with the other one-half of the martial assets to enable the CS to recoup as much of the marital assets as possible. i. Income rules: CS is allowed to receive an income of at the Minimum Monthly Needs Allowance ( MMNA ) set annually by Missouri Division of Family Services (DFS), which in July of each year and for 2016 is $1,992; the Maximum Monthly Needs Allowance is $2, for 2016 and can be achieved only if CS has extraordinary excess shelter expenses (homeowner s/renter s insurance, real estate taxes and mortgage costs) If after apportionment of IS s income to CS to raise CS s income to MMNA, the CS s income is still insufficient (below MMNA) ONLY THEN may marital assets may be retained by CS to add to CS s income. Rev. 4/26/16 Page 3 of 5

4 CS spouse may retain his/her entire monthly income, as it is not counted. Only the CS s assets are counted. If CS s monthly income is insufficient to enable CS to maintain home and meet expenses, can request a Fair Hearing to request that IS s income be apportioned to CS and in some limited cases, to enable retention of marital assets. The IS s Income All of IS s monthly income is paid to the nursing facility in which the Medicaid recipient resides, unless CS is apportioned some due to CS s income falling below the MMNA. 3. Available (Countable) Assets: All other assets property other than primary residence, vehicles, CDs, bank and money market accounts, mutual funds, stocks, IRAs, pension funds, annuities (other than Medicaid Qualifying Annuities), bonds, life insurance (unless no CSV), boats, airplanes, antiques, jewelry are Countable and Available assets and will be considered by Medicaid when applying for benefits. 4. IS s Income: All of IS s monthly income is paid to the nursing facility in which the Medicaid recipient resides, unless CS is apportioned some due to CS s income falling below the MMNA. 5. Resident is allowed a $50 personal needs allowance per month and deductions from income for any health insurance premiums (i.e., Medicare Part B, Medicare Supplemental, any other private health insurance coverage). F. Rules Medicaid is Payor of Last Resort and expects all available assets to be used to pay for care. If person has too many assets at time of application for Medicaid, spend-down or other Medicaid planning to meet eligibility criteria will be required. 1. Assets and property in excess of allowed amounts will need to be spent or transferred. 2. Transfers or gifts for less than Fair Market Value ( FMV ) will result in period of ineligibility. To determine period of ineligibility, divide amount transferred/gifted by the DFS penalty divisor which is what DFS has determined to be the private pay nursing home bed rate in Missouri for any given year. In 2016, this amount is $4, Transfers for less than FMV occurring ON OR AFTER 2/8/06 will be reviewed 5 years prior to the date of application (the Look-back Period ), regardless of whether transfer occurred from trust or non-trust assets. 4. If a transfer is made more than 5 years before Medicaid application, Medicaid cannot assess a period of ineligibility for any transfer, regardless Rev. 4/26/16 Page 4 of 5

5 of amount. If a less than FMV transfer is made within the 5 year look-back period, a penalty equal to the then-current penalty divisor in effect divided by the amount transferred will be assessed AT THE TIME OF MEDICAID APPLICATION (PROSPECTIVELY) EVEN IF THE APPLICANT HAS NO FUNDS. 5. The transfer of a non-countable asset, such as a resident s home or car to someone other than his/her spouse (or other allowed recipients) for less than FMV will change make the asset a countable asset. 6. Purchase of annuities due to 2005 and 2008 legislative changes requires that IS be named as primary beneficiary and the State of Missouri be names as contingent beneficiary. 7. Currently, the State of Missouri allows the following Medicaid planning that may only occur AT THE TIME A MEDICAID APPLICATION IS BEING FILED: a. Medicaid Qualified Spousal Annuity Allows the Community Spouse to purchase a lump-sum annuity (not generally commercially available due to the state-specific legal language requirements) that will pay the CS an income stream for the duration of the annuity (the time frame of which is chosen by the CS) with the other half of the marital assets above the amount the CS is allowed to keep. b. Individual annuities Allows assets of an individual Medicaid applicant to have his/her Attorney-in-Fact, who is permitted in the DPA document to transfer assets, to transfer a portion of the IS s assets out of their name into an account to be used for items/services that Medicaid does not pay for. This guide is provided for general informational purposes only. Specific legal advice should be sought from an experienced attorney with regard to individual circumstances. For additional information or appointment, please contact Debra K. Schuster, Esq Olivette Executive Parkway, Suite 220 St. Louis, Missouri ph.: (314) ; dks@dschuster.com For more information about our practice and how we can help you, please visit our website at Rev. 4/26/16 Page 5 of 5